James Daley

By James Daley

The Financial Ombudsman Service is one of the finest organisations in the UK in my opinion. If you've had a dispute with a bank, insurer - or any other financial services company - they'll be there to hear your story. What’s more, they deliver justice to thousands of customers a year - forcing companies to pay compensation and change their approach.

But an anecdote that I hear frequently in the world of money is that over the years, some banks and insurers have found ways to abuse their relationship with the Ombudsman. Rather than offer a good complaints service for their customers when they first get in touch, the most cynical companies use the FOS as a replacement for their own in-house complaints handling.

And it can be a relatively cost-efficient way for large organisations to manage disputes. When dissatisfied customers call up, they are sent a template letter saying sorry and that’s about it. After a few attempts at getting an adequate response on the phone, the customer is faced with no choice but to escalate their complaint to the Ombudsman or to let it lie. Most do the latter.

Even for those who do go the extra step, it’s no sweat for the big firms - who have to stump up a mere £550 to cover the Ombudsman's costs. No wonder that In some cases, firms take the view that it's better to pay a few FOS case fees than to spend the money on an efficient complaints department.


In the long-term, this kind of cynical approach should see companies sustain a good degree of reputational damage. But in a world where new business is often driven mainly by price, big firms don't need to be liked, they just need to be competitive.

The closest I've come to seeing this kind of approach up front was with Lloyds - several years ago I should add. When I made a complaint, I was given a personal case handler who was literally uncontactable. I rang his number at all hours of the day, but there was no voicemail and no answer. I was sure that the phone was sitting on the floor in an empty office block in Leeds.

I was working for a national newspaper at the time, so eventually I ran out of patience and called the press office, who magically sorted it all out for me in a matter of hours - not an option that’s open to most bank customers of course.

More recently, I've been having a dispute with my current credit card provider MBNA, after I was unable to cash in the rewards on my Lastminute.com card. After being pushed from pillar to post between MBNA and Lastminute, I was eventually told that I’d now have to continue my complaint in writing - as it had been escalated to the next level. It's hard to see this as anything other than a tactic to slow things down.

Shop for good service, not just a good price

It's hard to force companies to take complaints seriously. Old fashioned retail theory would tell you that good customer service creates a thriving business - driving more repeat customers and more recommendations that lead to new sales. But in finance, the same rules often don't apply.

That's one of the reasons I set up Fairer Finance. If customers are comparing two credit cards with similar terms, I hope that they'd look at our rankings to decide the tie break. In doing so, the companies who play the short-term game, and neglect their customers, will finally start to be penalised for their bad behaviour. Only then will they start to reconsider their priorities.